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Chapter 3

CONSULTANCY SERVICES:
PRINCIPLES, PRACTICES AND PROCEDURES

3.1 Meaning and Definition

Literally, consultancy means the act of consulting. It is the process

of seeking the advice of a consultant. According to New Webster's Collegiate

Dictionary 'to consult' means 'toask advice of' or 'to seek the opinion of' and
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'consultant' means 'one who consults or gives expert advice'.
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The World Book Millennium 2000 defines a corisultant as "a person

who gives professional or technical advice" and consultancy has been defined

as " the work or business of a consultant". However consultant is a word that is

likely to be misunderstood until one becomes more fully aware of the many

kinds of consultants. It is used in a generic sense and it gets the right meaning

only w h e n some prefixes are added like 'management', 'technical',

'investment', 'tax' etc.

A consultant is a n independent and qualified person who provides

professional service to individuals, organisations or business undertakings.

Consultancy services are the services provided by an independent and qualified


person or persons to identify and investigate the problems concerned with

policy, organisation, procedures and methods; recommending appropriate

action and helping to implement these recomrnendation~.~

Even though there are different areas of consultancy, in practice, all

these practically originate from management consultancy. Hence it is

appropriate to define the concept of management consultancy.

The Management Consultancy Association of India defines


management consulting as "an advisory service contracted for and provided to
business, public and other undertakings by specially trained and qualified
persons. It is a process of interaction wherein the consultant in an objective-and
independent manner diagnoses and investigates problems and issues
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concerned with management practices, analyses these; recommends

appropriate action and provides assistance when requested in implementation

of recommended solutions" .2

A consultant who is an expert in the relevant field or discipline


identifies and investigates the problems of clients and on the basis of his

expertise, he makes suitable suggestions and also helps in the implementation

of recommendations. Consultants give specialised services to clients in the

1 Institute of Management Consultants, U .K. Source: Jha, S .M., Seruices Marketing, Himalaya
Publishing House, Mumbai, 2000, p.383.
2 National Productivity Council Project Team, "Long Range Forecasting of Management Consultants in
India", Productivity, Volume 35, No.4, Jan-March 1995, pp.565-571.
form of advice, information and knowledge. They charge commission or
fee for their services.

3.2 Origin and Development

It is practically difficult to trace the exact origin of consulting practices

in India due to the dearth of any significant and sufficient literature o n the topic.

In ancient days saints, gurus and religious hermits offered their advice, which

arose out of their divine knowledge and deep meditation. Later as the social

system became more organized, kings used to consult ministers for their expert

advice on important matters relating to the administration of the State.

Originally these services were provided free of cost. But

gradually the consultants were compensated suitably for their services.

Materialism, change in values, increased sophistication and better lifestyles,

all paved the way for the commercialisation of consultancy services. Organised

consultancy services are the contribution of modern civilized complex society.

The number of individuals and organisations seeking the help of consultants

increased gradually. These individuals and organisations need the help of

professional consultants for increasing their rate of profitability or for

making personal gains. It is against this background that organised

consultancy services developed in the present-day context.


On reviewing available literature, it is seen that the history of
orqanised consultancy services mainly relates to that of management
consultancy. Most of the consultancy services were also centered around

management consultancy. Many developments in this area took place during

the post independent period, when it was started by the foreign consultants
engaged by some multinational companies. With large investments in the

public sector during the first and second five-year plans, the local consultancy

firms slowly started their operations to meet the needs of Indian industry. -

The pioneers of consultancy in India took the route of project

consultancy and industrial engineering. Several institutions and firms were


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established during this period. These include the Administrative Staff College,

National Productivity Council, A F Ferguson, Tata Consultancy Services and


Y

the Indian Institutes of Management (I1Ms). The consultancy services got a

boost during the 1960s and 1970s when many retired executives and foreign-

trained consultants joined the consultancy organisations in India. The


development banks and institutions encouraged consultancy services by
conducting feasibility studies and project appraisal for better project execution.

The setting up of RITES (Rail India Technical and Economic Services

Limited) in 1974 and lRCON (Indian Railways Construction Company Limited)

in 1976 paved the way for development of specialised consultancy in the area of

infrastructure projects. The 1980s brought consultancy to the areas of strategic

planning and software development. The 1990s have seen the


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phenomenal growth in information technology and consultancy for

infrastructure sectors after opening up the economy for foreign investment.

The current scenario of consultancy in India ranges from individual

consultants to large organisations and institutions like Tata Consultancy Services


or Indian Institutes of Management. Consultancy services are available in almost

all areas where expert knowledge or service is required. The emergence of

foreign consultancy firms like McKinsey, Price Waterhouse Coopers and others

in lndia in recent years and Indian consultancy firms going multinational make

the scene more complex and prospective.

3.3 Nature of Consultancy Services

Professional Consultancy services encompass a broad range of


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activities but can all generally be defined by certain common characteristics.

They are:

1. High Expertise

In the consultancy services, the product is 'expertise'. Consultants are highly

trained, well experienced and knowledgeable in a complex specialist area of

expertise. They provide expert advice to their clients in the area of their

specialisation. They acquire the skills by training and experience.

2. Membership in Professional Bodies

Consultants hold qualifications and accreditations in their field of


expertise. They have to acquire the prescribed qualification and
procedures to overcome the entry barriers in the field of consultancy

services. Further membership of a professional society or governing body

is also required.

3. Highly Cutomised Services

Consultancy services are tailored to meet client's needs. This leads to

greater customisation of services and high levels of variance in service

quality. These are high contact, people-based services with high degree of

specialisation.

4. Confidentiality

Consultancy services are provided to clients individually. These are

provided o n a basis built upon mutual trust and confidence. Credence

plays a n important role in the selection of a consultant. A consultant

should have knowledge, integrity and reputation.

5 . Quality Services

Last but the first preference is the quality of the service of consultancy.

Quality is the pivot around which the consultancy service revolves. Sky

is the limit for quality. Clients expect high quality of services from

consultants at reasonable rates. If the consultants offer world class


services, the task of its marketing is simplified. It is in this context that

almost all the consultancy organisations have been found making


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innovative efforts to develop a new perception of quality which helps

them in achieving the desired results.

3.4 Role of Consultants

Consulting is an art. A consultant provides an expert professional

service to his clients. Generally, consultants follow a 'problem-solving

approach' towards client's problems. They help the clients by:

- identifying and investigating problems concerned with strategy,


policy, markets, organisation, procedures and methods.

- formulating recommendations for appropriate- action by factual

investigation and analysis with due regard for broader management

and business implications.

- Discussing and agreeing with the client the most appropriate future
course of action.

- providing assistance where required by the client to implement


recommendations.

In carrying out these activities, professional consultants should be

expected to exercise independence of thought and action, deal with the clients

problems in the right perspective, give well-balanced advice and continuously

strive to improve their professional skills and to maintain a high quality of

service.
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Consultants are necessarily problem solvers who are presented with

an issue or a situation and asked to suggest recommendations on how it should


be dealt with. They may play a n innovative role, developing new ideas,

methods and systems on behalf of their clients. Consultants may act as 'an

extra pair of hands' doing things which people or organisations are perfectly

capable of doing but which they do not have the time or inclination to do.3

Sometimes, consultants act as investigators engaged to carry out a n

investigation or review of a matter, which is too delicate or complex. Such

investigations are necessary where the problems faced by the clients are

fundamental to the nature of business carried on by them.

Consultants can-also act as change agents. They can bring change to

the client's organisation and manage the change process. In this-rolethey are

facilitators who are deploying their independent point of view and consulting

expertise.

3.5 The Art of Consulting

The way in which a consultant renders his service varies enormously,


depending upon the specific needs of clients and their own preferences and

skills. There is no uniform approach applicable to all clients. The approaches

vary according to the main area in which they are working. The possible

approaches to consulting services are:

3 Shanker, G , "Consultancy Management in India - Emerging Challenges," Indian Management,


V01.36~No.2,Feb.1997, pp. 56-60)
(1) Strategic Studies:-the development of broad strategies and policies and

major revisions to organisational structures and activities to meet long

term requirements.

(2) Systems Development:-the introduction or amendment of system and

procedures.

(3) Problem solving:- providing solutions to organisational and management

problems.

(4) Service Provision:- th e delivery of services such as recruitment, selection


and training which could be carried out within the organisation.

( 5 ) Process Consulting:- the provision of advice and help in process areas


--

such as organisation, planning, objective setting, quality management

performance management, team building, conflict resolution and change

management.

3.6 The Service Delivery Process

Consultants cannot follow a typical pattern in their service

assignments. But in most assignments they do the following consultancy


activities in their service delivery p r ~ c e s s . ~

4 Institute of Personal Management, Using the H R Consultant, Achieoing Results Adding Value, IPM House,
Wimbledon, London, 1994, pp -3-6.
1 Problem Identification

Initially, t h e consultant discusses with the client the reasons for the

assignment, its objectives and the terms of reference. Clients will start

with their own description of the problem. But it is the duty of the

consultant to test these descriptions to obtain essential data on the back

ground to the assignment and the environment in which it is to take place.

Th e consultant must attempt at this point, to establish whether the client

has any 'hidden agenda'. Sometimes, the client may not have understood

the factors underlying the problems or may not have described them in

the right perception. An experienced consultant will always want answers

at this stage, to such questions as 'Who really wants the assignment to

take place and why?' 'Whatkind of resources is the client prepared to

invest in?' 'What does the client really expect from the assignment?' etc.

2. Project Planning

This involves decisions on what work needs to be done, who does it, the

timetable, the costs involved and methods of monitoring and controlling

progress. These preliminary assessments have to be developed into much

more detailed programme schedules. This enables the consultant to

4 Institute of Personal Management, Using the H R Consultant, Achieoing Results Adding Value, IPM House,
Wimbledon, London, 1994,pp.3-6.
specify the particular service to be delivered at each stage. Planning helps

in rendering time bound actions and controlling operations.

The first stage in any assignment is the collection of data about the client

organisation itself. Data collected may re-elateto the environment in which it

exists, the type of organisations, its objectives, policies, strategies,

procedures and workflows. The data may be collected by interviews,

meetings and observation. In complex assignments the consultant may make

a detailed investigation into the climate of the organisation, its culture and

management style. He may also conduct attitude or opinion surveys to elicit

information and data relating to the problem .


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4. Analysis

In the analysis stage, the complex mass of data and information are

closely examined to find key elements. Analysis facilitates the orderly


arrangement of data into logical patterns, thus promoting understanding

and pointing the way to an appropriate diagnosis of the problem.

Analysis concentrates o n facts but will also subject opinions to critical

examination in order to establish the extent to which they are founded on

fact. The aim of the analysis will be to provide a precise structure and

meaning for the assignment, which will serve as a mean s of


communication and enable those involved to make their judgements

within a clearly defined framework.

5. Diagnosis

This is the process of identifying the root cause or causes of the problem

or the real needs of the organisation in the area under review. A good

diagnosis will be based on rigorous analysis and will establish not only the

immediate factors to be taken into account but the long-term causes or

implications. As far as possible the diagnosis will be specific, but it might

be necessary to present a general picture of the context in which the

situation has arisen which has prompted the need for action.

6. Recommendations

The recommendations should flow logically from the analysis and


diagnosis. There will inevitably be alternative solutions or courses of

action which will have to be evaluated. Good consultants will always

formulate their recommendations in conjunction with their clients. This

will involve testing the alternatives, and this is often an interactive

process, as through further analysis and discussion, the way forward

becomes clearer. The recommendations should indicate how they should

be implemented and the timetable and costs of implementation.


7 . Feed back

Though the recommendations are formulated jointly with the client, it is

still necessary to make necessary feedback of the recommendations. The

feedback may take the shape of a formal document, in a highly readable

form. Sometimes, oral presentation with supporting data may be made

available.

8. Implementation

The agreement to go ahead with the recommendations either in whole or


with amendment should lead to the preparation of an implementation
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programme. The programme will contain how the consultant will help in

the implementation of recommendations. In this context, consultants are

not simply advisers. They get involved in the process of ensuring that the

recommendations which they have contributed really work.

9. Follow up and evaluation

Consultants may be asked to follow up the assignment. Follow up is

necessary t o evaluate its impact a n d m a k e suggestions o n a n y

amendments to the original recommendations. Majority of consultants

also gets job satisfaction o n follow up when they realize that the

recommendations really help the clients.


3.7 Consultancy Skills

Consultants use their subject expertise, acquired through education,

training and largely by experiences, on behalf of their clients. Ultimately,

however, it is the skill with which that expertise is used which differentiates the

good from the not so good consultants.

Consultancy skills are essentially those required to carry out the


consultancy activities as stated earlier. These include analytical ability,
diagnostic and interactive skills and the ability to communicate clearly and
pers~asively.~Analytical and diagnostic skills are particularly important in
problem solving. Interactive and communication skills are critical for all types
of consultancy services.
.-

The mix of consuitancy skills varies for different types of

assignments. However, the following are the important skills a consultant need

in discharging his services efficiently.

1. Listening Skills

Effective consultants listen actively to their clients. AS facilitators their role

may be to gather the ideas from the clients. Consultants elicit information

from clients by careful listening. They listen and then analyse and

interpret the information received from clients. Consultants are also

"lnrtitute of Personal Management, Using the HR Consultant, Achieuing Results Adding Value, IPM House.
Wimbledon, London, 1994, p . 7 .
agents of change. As such, they can not only help to release ideas but also

analyse, assess and structure them so that they combine to make a

powerful contribution to the achievement of change.

2. Communication Skills

Consultants need good communication skills. Effective communication is


critical for reflecting, clarifying, interpreting and probing. Reflecting is
what consultants do when they mirror the client's ideas so that they can be
expressed more freshly and objectively. Clarifying is rephrasing the
client's statements so that they become clearer, sharper and more precise.
Interpreting may require putting together the implications of several
statements. In probing, consultants elicit from their client's ideas and
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opinion which the latter may not have expressed, or even be fully aware

of.

3. Motivational Skills

A consultant needs motivational skills to influence the minds of his

clients. He should be self-motivated and have a positive mental attitude.

He should be willing to adapt to different situations, open-minded and

receptive to new thoughts and ideas. A consultant should act as a

facilitator of change.
4. Problem-solving Skills

The success of a consultant depends to a great extent on his problem


solving skills. A good consultant must have an analytical mind, critical

thinking and problem-solving abilities. He must be able to understand a

problem, analyse and solve it with logistics for implementation in a

timely and organised manner.

5. Decision-making Skills

Another important skill required for successful consultants is the ability

to take quick decisions. A consultant must be able to find alternative

solutions to a problem and evaluate these alternatives to arrive at an

appropriate solution. He must have expert knowledge regarding the tools

and techniques used for managerial decision-making.

6 . Human relations Skills

A consultant has to be client-focused and committed to meeting the needs

of clients. He must recognise the client's needs, must be able to put them

at ease while interacting with them, and build trust and respect with

clients. Good negotiation skills are extremely necessary while employing

the services of personnel in the service delivery process. He must be able

to build teamwork and maintain long-term working relationship with

employees.
7. Time -management Skills

Time is the most valuable resource of man. Management of time is

important for timely implementation of suggestions by clients. Time is

fixed for all and time cannot be saved or stored. The important aspect of

time management is defining priorities that is putting first things first.

'Planning your work and working your plans' is the essence of time

management. A consultant has to deliver the right services quickly at the

place assigned to him and within the time that is allotted to him.

3.8 The Consultant - Client Relationship


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The consultant-client relationship implies dealings or interactions over

time. The duration of relationship depends on the natufe and extent of services

rendered by the consultant. It may be one that lasts for days or weeks for solving

specific problems like event management, building design or interior decoration.

Consultants may also build up long lasting relationship with clients

in areas like investment, tax or software consultancy.

The role of consultant has a direct bearing on consultant-client

relationship. In this context, the consultant has certain duties towards the

clients and strict adherence to certain guidelines. These duties are6:

Walsh. John E (Jr.), Guidelines for Management Conrufionts in Asia, APO, Tokyo, 1973, pp. 35-77.
1. Providing clients with information.

Consultants have to provide information to their clients both external and

internal to their organisations. External information relates to aspects such

as economic, political and commercial relevant to the clients' problem.

The internal information relates to the client's own organisation, its

structure, strengths, efficiencies and inefficiencies. In helping the clients

to obtain information, the consultant must keep up with the latest

knowledge and developments in the respective areas.

2. Providing clients with techniques.

In the consultant-client relationship, the consultant has to provide practical

methods that help the clients in achieving desired objectives. These -

techniques are broadly divided into technical and managerial. When a

consultant diagnoses a problem calling for expertise in a particular

technical area, he should make it clear to the client that a specialised

technical consultant is required. Managerial techniques include flow charts

and diagrams, control charts, budgets, cash flow analysis etc.

3. Providing clients with an objective point of view.

A consultant should have a n objective point of view when gathering

information and conveying opinions to the clients. The client looks upon

a consultant as a n interested party receiving objective information from


him and advising him what to do. The consultant must be not only

objective but also informed so that he remains in the superior position.

4. Providing clients with Problem Diagnosis and recommendation

Among all the consultant-client relationship roles, providing clients with

problem diagnosis and recommendation is the most difficult one. This is

because the consultant must tell the client what is wrong, what to do and

how to do it. There are also chances of disagreement or conflict between

consultant and client in this respect. But diagnosing problems is the

critical task of a consultant. He must have skill and expertise since there

are no rules of thumb for making the diagnoses. However, consultants can

follow different approaches developed by researchers for diagnosing and

recommending solutions and prepare a checklist of the procedures to be

followed at different stages of their work.

5 . Providing clients with final report and follow up

A consultant's report is a formal statement of the results of an investigation

or of any matter on which definite information is required, as directed by

some clients. Every report should contain a statement of the problem; the

procedures followed to solve the problem, the condusions reached by the

consultant and his recommendations including follow up measures. The

structure of the report, its length and degree of details should be decided in

advance by the consultant and client prior to the start of an


assignment. It is the practice of consultants now-a-days to submit shorter

reports with more detailed appendices since a typical client often doesn't

have the time, patience and skill to read voluminous reports.

3.9 Consultant-Client Interface in Consulting

Personal selling is viewed as the most important promotional tool of

consultancy services. It helps the consultant to make direct contact with the

clients, facilitates two way communications and builds confidence among the

clients. Moreover, the buying behaviour of individual and corporate clients

dictates that the consultants themselves can only undertake effective personal

selling in the context of consultancy services. As W.J. Wittreich puts it: 'fa
professional service can only be purchased meaningfully from someone who
--

is capable of rendering the service".'

Personal selling in consultancy services is a long drawn process,

which involves a series of sequential steps. Fig. F7 indicates the various stages

involved in successfully selling a professional service-offering to a prospective

Continuing
Relationship
Management

FIg.F7 The Personal Selling Process


'
Wittreich, W.J., "How to BuyfSell Professional Services",Horuard Business Review. March- April, 1966.
pp., 127-138, Source: Morgan, Neil, A, Professional Seruices Marketing, Butterworth Heinemann Ltd.,
Oxford,1991, p.163.
Morgan, Neil. A, Professional Seruices Marketing, Butterworth Heinemann Ltd.. Oxford, 1991, p. 164.
I. Initial Contact

The initial contact between the client and the consultant is obviously the
first step in personal selling process. A consultant cannot always expect

clients to knock on his door for professional help. An enterprising

consultant needs prospective clients for business development and a large

segment of target clients are left out in the absence of proper marketing

communication. Therefore, it is necessary to contact new and prospective

clients either by calling personally, mailing or conducting seminars,

workshops etc. Some referral sources can also be made use of by the

consulting firms for making initial contacts with prospective clients.

2. Client Courting -

At this stage the task of the consultant is to sustain the interest of the
prospective client and build confidence in the firm. Client-courting
involves focusing upon the client's problems and diagnosing the problem

through listening, questioning, information gathering and reference to

report on client problems. The consulting firm may also introduce its key

personnel to the prospective client at this stage and also inform him about

the experience and success stories of the firm. The object of client

courting is to instill confidence in the minds of prospective clients.


3. Meeting and Proposal

If the courtship is successful the next step is a meeting between the


prospective client and the consultant. It is a new business discussion in

which a written or verbal proposal is presented to the prospective client

for proceeding with the consultancy work. The proposal contains an in-

depth analysis of the problem facing the client, the solutions offered and

the benefits expected of the solutions. The consultant may explain how the

solutions are going to benefit the client or minirnise the negative effects.

4. Client Negotiation and Closing

In order to reach this stage of the selling process the consultant has to

- convince the prospective client that the client problem has been analysed

thoroughly and the solution offered by him is appropriate and the

consulting firm is capable of providing it. The prospective client may

express concerns or raise objections to the solution or service offered. It

may also relate to the staff, fee or timing of services. But the consultant

can surmount these objections or concerns by negotiation and settlement.

Closing and satisfying the prospective client is the last step during the

meeting. It is also an important part of the negotiation process. Closing

involves agreement and determination of the prospective client's readiness

to accept the service and close the negotiation. The consultant can close the

meeting with a statement confirming the prospective client's sound


business decision and reemphasising the firm's willingness to help the

prospective client in doing better in his business.

5. Client Relationship Management

The success of any consulting firm as in the case of a n y service firm is

dependent not upon getting new clients but upon retaining the existing

clients. Therefore, it is essential that a consulting firm maintains good


relationship with the clients. Clients always prefer to approach a
consultant with whom they have some past experience or business
dealings. Taking followup actions and evaluation of the effectiveness of
the meeting can contribute to-building sound relationship with clients.

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3.10 Guiding Principles of Consultancy Services

There are no common guidelines or code of conduct applicable to all

types of consultants. Professional bodies like Association of Management

Consultants has their own code of ethics applicable to their members.

Consultants in different areas have to follow the rules and regulations relevant

to their respective areas. For instance, an investment consultant has to follow

the Securities and Exchange Board of India (SEBI) guidelines while rendering

portfolio management services. Similarly a n architect has to follow the


guidelines stipulated by local bodies in designing a building structure. Thus it

is very necessary that consultants adhere to some principles in the consultant-

client relationship.
Walsh, John E (Jr,)gives the following six guidelines for consultants.

Though these are intended for Management Consultants, these are also

relevant to consultants in other areas. These guidelines are:9

1. Consultants shall start their assignments o n schedule and follow a


systematic plan.

2. They should not get involved in matters not included in their assignments.

3. A consultant should remember that he is primarily an advisor and not a


decision-maker; and, therefore, not put pressure o n the client to make

decisions, which, a consultant feels, are necessary.


4. It should be made clear at the outset that a consultant is an ordinary

-
person and that the client should not expect miracles. There can be a
great difference between what the client expects and the best an y

consultant can do for him.

5. They should not jump to conclusions too quickly, but make sure that

necessary facts are collected by holding preliminary talks with the clients

before submitting written reports.

6 . They should not openly criticise client's personnel or method of operation.

9 Walsh, John E (Jr.), Guidelines for Management Consultants in Asia, APO, Tokyo, 1973, pp. 23-25.
It may not be out of place to state the nine points' code of

professional practice laid down by the Association of Management Consultants

in the USA. These are reproduced below :lo

1. Management consulting is a profession and, therefore, consultants must

adhere to professional standards of practice.

2. A member will not accept an engagement unless he has reason to believe


that tangible results can be obtained for the clients.

3. Information gathered on assignments will be held in strictest confidence.

4. A member will not accept assignments to serve as a tool for management


to carry out plans which he has agreed to in advance, and to which the
member disagrees.

5. A member will advertise and promote his business in a professional way


only.

6 . A member will not accept fees, commissions or kickbacks as a result of


recommending equipment, supplies, or services without the knowledge

of the client.

7. He will not at the same time serve two or more clients who compete
with each other without the full knowledge all parties.

lo Walsh. John E (Jr.), Guidelines for Management Consultants in Asia, APO, Tokyo, 1973,p . 198.
8. He will strive to improve the effectiveness of the work of all
Management Consultants.

9. Failure to adhere to the foregoing Code of Professional Practice is a basis

for isolating him from the professional body.

3.11 Technological Development in Consulting

Development of technology plays a n important role in consultancy

services. Consultancy procedures will become well-developed systems using

data base and information technology. Information technology will be

increasingly used for service delivery process. Strategy for adoption of

information technology will be linked with the overall business strategy of

efficiencyand competitiveness.

Proprietary and public domain databases will be widely used by

consultants. Consultants will also develop databases on their own and share

them as value added products. Modeling and simulations will be on the

increase. Scientific approaches to analyse client's problems will ensure greater

client satisfaction.

Consultants will employ inter disciplinary technician and experts for

making socio-economic analysis and future predictions. It is possible to

integrate consultancy with other activities like recruitment, training and

development. There is also scope for networking by consultants using


information technology. Consultants may also share common facilities like

offices, human resources and equipment.

3.12 Emerging Trends

In recent times consultants began assimilating at a fairly rapid pace,

innovative and radical new solutions, tools and techniques. Consulting firms

leveraged their traditional consulting skills and experiences to help individuals

and organizations to implement changes and new development in their fields of

operations.

Consultancy services have moved from being based on creation of

new knowledge to application of new knowledge."


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Fundamental to this transition is the speed of technical and

innovation change. The faster the change, the more challenging it is to be at

the frontier of new knowledge for consultancy organization.

The emergence of new technology - driven business systems such as


typified by e-commerce, presents a real challenge to consultancy firms as they

are likely to be more knowledge seekers rather than knowledge-creators. They

are therefore, not necessary at the most favourable position in the consultancy

value chain. The new business system also emphasizes a much more integrated

perspective of technical change and business systems than

" Prof.M.G . Korgaonker, ICICI,Chair Professor & Head, Schools of Management, IIT, Bombay: "Consulting -
Endgame or New Beginning?", The Economic Times, Mumbai, Tuesday 30,January 2001.
100
has been the case in the past, Established consultancy firms will take a while

in putting in place internal systems, human resource, structures, knowledge

basis, required to provide effective solutions in a dynamic technological

environment.

3.13 Future Outlooks

India is currently witnessing rapid changes on the economic and

industrial scene. The bold initiative taken by the Government to liberalize the

economy has forced individuals and business organisations to reexamine their

current approaches and develop new strategies to organise and do business.

Productivity and efficiency have added new importance in managing business

to maintain competitive position. Individuals and organisations face new

problems in the present competitive scene. It is in this context that consultancy

services have become very crucial for the growth of industry and economy.

Consultancy opportunities will increase in areas like management

consultancy, information technology, market research etc. The consultant will

be more professional, demanding and seeking tangible results. He will get


repeat orders by providing quality service followed by service guarantee.

The client feedback in the market will continue to be the determinant for
selection of consultants.

With the accelerated pace of economic reforms and liberalisation,

powerful winds of change are sweeping through Indian organisations. The

consultant must be proactive to the changes acting as an agent of change. He


must adopt new work culture, attitude and ethics and

competitiveness.

A consultant will have to expand his knowledgebase and ensure that


it is constantly updated. In a rapidly changing world, innovations are taking

place at a breath taking speed. We are observing not only obsolescence of

products but also of services. A consultant must innovate new ideas and

solutions for solving clients' problems. He must bring new knowledge and

impart new skills to clients, interpret new theories and set new standards of

performance.

- A consultant must develop a close and long lasting client relations hip.

He must develop a new value system in which total commitment to the client
.-

is the ultimate objective.

The value system must ensure client-satisfaction in delivering the

services, maintaining work schedules, and most importantly, focusing on the

client's interest at all times. The consultant will be increasingly called upon to

get involved in the implementation of recommendations. In short, the

relationship between a consultant and his client will be strong, intimate,

facilitating and mutually beneficial.

3.14 Consultancy Services - Opportunities in Kerala


The State of Kerala could not attract major investments in large

industries due to its special geographical and sociological conditions. But the
State with high-quality human resources is the best suited for the growth of low

investment, high-technology service industries. The State has already shown

its leadership in traditional service sectors like banking, insurance, transport

and communication. Now there is good untapped potential in the area of higher

education, tourism, information technology, software development etc. The

State has achieved unparalleled growth in areas like literacy, health care,

standard of living, women employment etc. Consultancy Service is a n area

with good opportunities for development in the State. It .is imperative at this

stage to explain the nature and process of consultancy services in certain

important areas relevant to the State of Kerala.

1. Project Consultancy

Project consultancy is an integrated advisory service given to a client in

setting up of new industrial or commercial project. These include

preparation of project reports, conducting economic and technical

feasibility studies, obtaining necessary legal clearances, arranging finance

for projects, sourcing of plant and machinery, logistics management,

planning men and materials, arranging financial and technical

collaborations, marketing tie-ups etc.

There is good potential for project consultancies in Kerala in areas like

setting up of small scale enterprises, infrastructure projects, hospital

projects, hotel and tourism projects, amusement parks, pollution control


plants, energy conservation projects, effluents and waste-water treatment

plants etc.

Kerala, better known as 'God's Own Country' in the tourism circle, is

famous for its long coastlines, idyllic backwaters, cultural heritages,

ayurvedic treatment, yoga etc. Consultants have good opportunities in

giving expert advice in setting up new projects in the areas of ecotourisrn,

backwater tourism, heritage tourism, ayurveda and yoga therapy etc.

2. Architecture and Design Consultancy

Architecture, civil engineering and building design offer tremendous


-

opportunities for consultancy services in Kerala on account of the booming

construction industry in the State. Architects are professionals who design

buildings and structures with practical knowledge of civil engineering and

construction materials. They provide expert advice on planning, design,

construction and maintenance of high-rise buildings, structures, dams and

bridges, tunnels, pipelines and transportation systems including highways,

ports and airports. Engineering-consultancy services in related areas like

water-supply systems, waste-water disposal, effluent treatment plants in

factories etc. also provide good opportunities for consultants.

3. Interior Design Consultancy

Interior designing and decorating, exterior finishing and landscaping offer

good opportunities for consultants in these areas. Professionals in these


fields are involved in the designing of the interiors of any construction,

structure or building'. They work closely with architects, structural

engineers and other technicians. They give expert advice on the efficient

and economic usage of space to suit the purpose for which the

construction is made. They prepare a blueprint of the complete design,

layout and ambience of the space ensuring the most suited indoor

environment for the construction. They are also responsible for selecting

the right furnishings, lighting and furniture to enhance the dkcor and style

of the interiors. The work of interior designers and decorators extent to

large residential houses, hotels and restaurants, heritage buildings,

jewelleries, textile showrooms, corporate head offices etc.12

4. 'SoftwareConsultancy

The fast growth of Information Technology (IT) in recent years opens


new vistas for consultancy services on computerisation, nehvorking and

software development in the State. The State has taken some major

initiatives in the development of Information Technology by establishing

software parks at various centres. The efforts of the Government to make

the State one of the most IT savvy States together with the availability of

high quality human resources offer excellent opportunities for IT related

services in the State.

l2
Space Designer, The Hindu - Opportunities. Kochi, Wednesday, August 1, 2001.
Software consultancy has good potential for developing special application

software for government offices, banking and insurance institutions,

railways, airlines, stock broking firms etc. from domestic and overseas

clients. The IT initiatives of business establishments and corporations

require software for office management, inventory control, payroll

accounting, hospital administration, hospitality management etc. There

are also good prospects for software development for educational

programmes, entertainment, Internet services, web designing, graphics

and animation.

5. Management Consultancy
--

Management consultancy services are still in the nascent stage in the


--

State on account of the poor growth of the industrial sector. With the

liberalisation of the economy and increased competition,.industrial units

are facing a number of problems. The role of the management consultant

comes in this context. A management consultant provides expert advice on

a vast area of managerial problems. These include designing

organisational structure, downsizing, mergers, acquisitions, foreign

collaborations, cost reduction strategy, total cost management,

advertising, marketing research, quality control, IS0 Certification,

rehabilitation plans, devising infotech strategies, risk analysis and

management, setting up of performance evaluation, protection of

Intellectual Property Rights, Trade Marks and Patent Rights etc.


6 . Investment Consultancy

Growing investment culture and greater awareness of the potential of

stock market in recent times led to a substantial increase in the number of

equity investors in Kerala. A large number of them are non-resident

Indians working in the Gulf countries. Investors in the stock market need

timely and accurate information for making investment decisions. The

developments in the capital market particularly the entry of Foreign

Institutional Investors (FIls)and private sector mutual funds call for greater
professionalism in investment decisions.
.-
Investors seek expert advice from consultants for investment decisions in

the wake of uncertainty, price volatility and greater regulation of stock


-
markets. Merchant Bankers, Fund Managers, Financial Consultants and
large brokerages are now offering investment advice to clients especially

high net-worth investors and NRIs. They can give expert advice to clients

to reduce risk and maximise return o n investment.


The areas of advice include:

- Selection of companies for investment based on equity research,


fundamental and technical analysis.

- Selection of securities like equity shares, debt instruments,


derivatives, mutual funds etc.
107
- buy, hold or sell advice

- Advice on services like broking, dematerialisation, custodial services

7. Educational Consultancy Services.

Educational consultancy offers excellent opportunities in Kerala. The

number of students seeking professional education outside the State and in

foreign universities is increasing in recent years. The recent policy of the

State government to allow private sector in professional education in the

State requires the services of consultants in the field of setting up of

professional institutions in the areas of engineering, medical science,

biotechnology and business management. Educational consultants can

also give expert advice on course contents and curriculum development,

faculty positions and development, affiliation with international

universities, accreditation by National Accreditation Council and All India

Council for Technical Education (AICTE), IS0 certification process,

upgrading of institutions into learning centres of excellence, collaboration

with industrial undertakings and placement services.

8. Employment / HR Consultancy

Employment and placement consultancy has good avenues for growth in

Kerala with large number of educated unemployment youths in the State.


l3
"The Price of Investment Advce" - The Hindu, Kochi, August 13, 2001.
It requires only moderate investment, a n office in a good location with
phone connection and a few marketing staff. A personal computer with

Internet and online service facility is an added attraction.

An HR consultant or through his marketing executives meets corporate


clients and finds out their manpower requirements. He then enters into
contracts with the clients for recruitment and placement services. The
consultant maintains a list of candidates seeking placement services, their
bio-data and personal resumes. After receiving the client's specific
requirements regarding career positions, job requirements, age of
candidates, education, experience and training, the pay package and so
-

on, the consultant now shortlists the candidates from the list of registered

candidates. Sometimes a screening test may be conducted to shortlist the

eligible candidates. The shortlisted candidates are sent to the client's

organisation for interview and final selection. The bio-data and resumes of

candidates, which they are not able to consider for current position, are

used for future recruitment purposes.14

At present the HR consultancy services in the State are limited to positions

at middle level in the fields of management, administration, software

personnel and manpower requirements of foreign corporate clients. With

the picking up of corporate culture in the State there is potential for

placement services in positions at lower levels like sales personnel,

l4
''Acareer About making careers," The Hindu Metro, Kochi, November 19,2001.
109

operating staff, office assistants, security services, nursing and paramedical

services etc.

9. Event Management Consultancy

Event management is fast emerging as a profitable business service in

recent years. Individuals, organisations and companies, big or small are

seeking the advice of professional consultants to plan and organise events

successfully attracting the respective audience for whom these are

intended and attaining commercial value. There can be any type of event

for which consultancy may be sought like charity shows, product launches,

concerts, fashion shows, beauty contests, trade fairs, jubilee celebrations,

movie releases, felicitations, wedding parties etc.

The work of an event manager begins weeks or even months before the

actual event. Depending on the type of event, he builds a concept around

the event and makes sure that it is a commercial success. He designs the

basic framework of the event and then prepares the marketing plans. He

has to work on the logistics, locate the site, enter into contract with

suppliers and performers, give necessary publicity, media coverage and on

the date of the event he plans, co-ordinates and manages every aspect of

the conduct of the event. It requires a lot of ingenuity and imagination,

creative thinking and problem solving skills to be a successful event

manager.l5
l5
Opportunities. The Hindu , Kochi, Wednesday, March 28,2001.
3.15 Consultancy Marketing - The Concept

The application of the concept of marketing in consultancy services


is a recent phenomenon. Since time immemorial, consultants have been making

available the specialised services, though not in the present nature and form.

The hermits, saints, gurus etc. were all invited to give expert advice, but not on

payment basis. This makes it clear that consultancy services were available but

the consultants were not found charging fee or commission for their services.

Now-a-days consultancy services are organised just like an y other


services. They are now run as a full-fledged business strictly o n commercial
lines. A number of consultants have been found engaged in the process and
they have been found selling their services for a price. This has paved the way
-

for conceptualising marketing in the consultancy services. The growing


significance of innovative ideas expertise mainly to excel competition paved
avenues for practicing marketing.

An individual or an institution started the process of marketing the

consultancy services on national and international levels for making profits

which made the business conditions competitive. Since then the marketing

concept has gained a n outstanding significance. With the application of

marketing concept, the professional excellence could get due weightage in the

entire process of consultancy services.I6

l6
Jha. S.M.. Seruices Marketing, Himalaya Publishing House, Murnbai. 2000,p. 383.
The aforesaid facts make it clear that materialism paves the way for

selling the services, which necessitates a strong foundation for the application

of marketing concept. Thus in consultancy marketing the emphasis is o n

marketing of expertise by an individual or a n organization where they

formulate the marketing mix and keep on moving the process of innovating the

decisions to establish their edge on the competitors.

In the marketing front the consultants are expected to provide quality

services to their clients and prospects. They are supposed to act as true

professionals. They have to innovate their ideas and services according to the

changes in market conditions. They have to follow appropriate pricing and

promotion strategies. They have to strive for processing the service so as to

bridge the gap befween services promised and services offered.

3.16 Need for Consultancy Marketing

Initially many consultancy firms are passive in the extreme, waiting

for clients to come to them and viewing marketing activities as unnecessary or

even forbidden. One of the reasons put forward for this response to marketing

is that the employment of strict codes of conduct governing many professions

particularly those regulations concerning advertisement and promotion, has

been equated to anti- marketing.

Another reason for the virtual rejection of marketing has arisen from

the traditional strength of professional consultants in the market place. They


were limited in number and had almost zero substitutability for their services.

This is different to other types of services with relatively high substitutability

and competition in the market place.17

The organisation structure is yet another reason for the constraint in

adopting marketing by consultants. The management structure is often based

on partnership or single ownership and not necessarily based on functions or

roles. Time constraints imposed o n consultants who actually carry out


interdisciplinary services also prevent the adoption of marketing principles in
consultancy services.

Of late, there has been a proliferation in the number of consultants


and consultancy organisations. This is due to a number of factors including
-

the growth of business activity in general and demographic changes and the

more widespread accessibility of professional education and training. The

number of practitioners competing in the market has grown substantially and

the degree of service provider substitutability has grown likewise. The effect of

this has been increased competition and the effects of economic slowdown

have led to further intense the competitive pressure. This situation would

appear to underline the need for effective marketing by consultancy services to

ensure survival, profitability and growth. In essence, sound business and

management practice call for the implementation of proactive marketing

programmes and strategies.

I'
Woodruffe, Helen, Services Marketing, Macrnillan India Ltd. New Delhi, 1999,p. 268.
The following points make it justifiable to apply modern marketing

principles to consultancy services:

1. Growing importance of specialised knowiedge

The application of specialised or expert knowledge gaining importance in

almost all areas. The mounting competition in the business environment

makes it essential that we assign a n overriding priority to specialisation or

expertise. The inventions and innovations, growing importance of

sophisticated technologies, continued efforts to keep on moving the

process of qualitative transformation are some of the important factors

making consultancy an immediate solution. It is not possible for an -

organisation to establish an independent cell for all the consultants.


-

Therefore, it is imperative to hire the services of professional consultants.

This necessitates developing services on an organised basis and practising

marketing appears to be an effective proposition.18

2. Obtaining Impartial View

The objective of obtaining impartial views necessitated the application of

marketing principles in consultancy services. It is but natural that those

employees serving in an organisation are influenced by a number of

considerations which complicate the process of obtaining views without

l8
Jha, S . M . . Seruices Marketing, Himalaya Publishing House, Murnbai, 2000. p. 384.
any prejudices. Consultancy marketing gained popularity since it helped

in getting the impartial views.

3. Enhancing Service Quality

Consultancy organisations need marketing to understand client needs and

wants. They have to develop and operate the most appropriate product or

service offerings to meet those needs. Marketing is aimed at enhancing

service quality, thus ensuring client satisfaction and goodwill and building

the organisation's reputation.

4. Communicating Service Offerings


-

The marketing practices in consultancy services became essential to avail


-

t h e services of efficient consultants. The consultancy organisations need


to inform the market about their offerings simply to communicate their

availability to the public who may not be well informed. Marketing helps

them in getting detailed information regarding the availability of

consultants in the different areas and their services.

5 . Making the Consultancy Services Productive

Marketing principles has the efficacy to make the services cost effective.

I t has also been found essential for accelerating productivity and

maximising profitability. Marketing is essential to become more business


oriented in the highly dynamic competitive environment. An individual
115

or an institution invests substantially for enriching the credentials or

developing professional excellence. It uses the services of a consultant


for making profits or personal gains. This engineers a strong case for

marketing of consultancy services.

6. Adapting to shift in Management Philosophy

Marketing is now accepted as the way of business life. The primary

function of a firm is now to market the goods and services, production of

goods or rendering of services is only auxiliary to its marketing task.

Service firms are not exceptions. In the present environment of

competition the success of a consultancy organisation is depended mainly

on how well its services are marketed.

7. Bringing necessary change in the Organisation

Marketing principles have changed the entire orientation of a service


organisation. Previously a consultancy firm was service-oriented and little
attention was paid to the client's needs and expectations. The modern
organisation is client-oriented and takes direction from the mandates of
the market. Thus marketing acts as a change agent and makes the firm
proactive to client's needs and wants.

8. Helping the firm in Decision-making

An organisation that has adopted the marketing philosophy realises that


marketing factors are decisive in most areas of business decisions.
Management decisions relating to determination of service portfolio,

development of new services, offering the existing services to new

markets etc, depend to a great extend on marketing aspects. Thus

marketing management plays a vital role in most business decisions.

3.17 Approaches to Consultancy Marketing

According to Dick Connor and Jeff Davidsonlg there are five

approaches to consultancy marketing. They are the following:

1. The marketing-driven approach

This approach is based on-advertising, heavy-promotion and emphasis on

image development. Firms following this approach focus on getting

known in the community or region as providers of good products

and services at reasonable prices. In addition to costly and time-

consuming, self-promotion, this approach also requires the development

of aggressive personal selling skills.

2. The market-driven approach

The market-driven approach has a subtle word difference with the


marketing- driven approach. It focuses on building relationships with key
players in the market and developing an understanding of the general

l9 Connor, Dick and Davidron Jeff, Marketing Your Consulting and Professlono1 Serulces. John Wiley &
Sons,Inc. NewYork, 1997, p . 9.
needs of the market. However, in this approach there is n o individual

client level analysis as is done in client -centred approach.

3. The traditional marketing approach

Under this approach the consultant provides good products or services to

meet the general demands of the marketplace. The client chooses a

consultant by reputation. The service provider misses opportunities to be

of service because of failure to be attuned to recognising clients needs.

This approach is reactive to clients only when they approach the consultant

for his services.

4. The hard-sell marketing approach

This approach puts emphasis o n communicating about their firms, their


products and services. They assume that growth is largely the result of

being known, instead of focussing on providing solutions to the

problems of their clients. Obviously, the clients and prospective clients

dislike the hard-sell approach.

5. The client-centred marketing approach

The client-centred marketing approach involves developing a superior,

continuing relationship with the most desirable clients in the market to

ensure retention of existing clients and attracting new prospects. Once the

relationship is established, the task of the service provider is to sense,


sell, serve and satisfy the needs and expectations of the clients. A value-

based relationship creates a high degree of interdependence and is often

called a win-win relationship.

Of the above approaches the client-centred marketing approach is


considered to be the most appropriate and suitable for consultancy services.

The client-centered marketing approach is the important method of marketing


followed by many service providers. It is a core business process that makes an

individual client or high potential prospect in a target market the focus and the

beneficiary of the services. The object of client-centred marketing process is to

produce and deliver value to the clients and leverage the activities of the

consultant to ensure the satisfaction and long term relation of key clients.

The strategic decision to employ client-ce-ntred marketing


encompasses:20

1. Selecting a target market niche for special attention.

2. Developing an insider's understanding of the market as a means of

identifying current and emerging needs of clients.

3. Preparing, positioning, promoting and providing value-adding solutions to


client's problems.

20 Connor, Dick and Davidson Jeff, Marketing Your Consulting and Professional Seruices.
John Wiley &
Sons,tnc. New York, 1997, p.6.
4. Leveraging the time, resources and relationships available to the service
provider.

The principles of marketing are very well applied to services

marketing. Consultancy services is not at all an exception to this. The following

chapters analyse the application of marketing principles to consultancy services.